Monday, April 14, 2014

Alibaba to Acquire Chinese Mapping Firm

            The article that I read for today’s blog reflection is called “Alibaba to Acquire Chinese Mapping Firm as Buying Spree Continues” that I found on The New York Times. The article explained how the powerful Chinese ecommerce company, The Alibaba Group, is planning on buying part of AutoNavi Holdings. AutoNavi Holdings is a Chinese company that deals with mapping and navigation. I decided to reflect on this specific article because it is good to know what is happening in the IT world internationally.
            Firstly, the article assumes that this is the final step for The Alibaba Group before their stock is listed in the United States. This automatically surprised me because I have not heard of many Chinese companies being traded in the American stock market. From this fact, I think that The Alibaba Group is in fact an extremely powerful ecommerce company.
            The specific numbers for this business buy out are extremely high. Alibaba will pay 5.25$ per share to AutoNavi Holdings stockholders. With this the company will be able to control the 72 percent of AutoNavi Holdings that they did not already own. This business deal values AutoNavi Holdings for around 1.5$ billion. This is a very big business transaction that will most definitely affect the market not only in China, but in the United States as well.
            Analysts have examined this transaction very closely, and it seems like this is a big step for The Alibaba Group. The company has been making efforts to implement new mobile offerings in China since the country has had a large surge of smartphone use. One analyst in the article explained that adding AutoNavi Holding’s services into Alibaba’s websites would allow for location specific discounts as well as gathering information on the company’s customer spending behaviors.
            The most surprising fact of the entire article was what Robin Li, CEO of a Chinese online search company called Baidu, had to say. He explained that China’s online commerce grows at around roughly 60 percent on a yearly basis, while online ecommerce in the US only grows at around 10 percent per year. In the last paragraph of the article, it also states how The Alibaba Group recently invested 280$ million in the new Silicon Valley mobile messaging app creator called Tango.
            This article was very informative in a number of ways. I was able to learn about a company that I had no prior knowledge about before reflecting on this article. It was good to learn about international companies because the world is extremely globalized today, and is still growing through international trade. Knowing how other parts of the world are implementing new IT innovations greatly helps us, since we can learn from these international companies. I look forward to seeing how other countries use IT to their advantage in business.

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